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G. Rambabu

NEW DELHI, Feb. 17

IN what should be clear pointers towards a reduction in the licence fee rates for cellular and basic service telecom operators, the Department of Telecommunications (DoT) has pegged the collections for fiscal 2003-04 at just Rs 88 crore over and above what it has collected in the current fiscal.

As against estimated revenues of Rs 2,446 crore in the current fiscal, the DoT in its estimates forwarded to the Finance Ministry has stated that Rs 2,534 crore is expected to be collected in the next fiscal. This at a time when the subscriber base is growing by leaps and bounds across the country.

The licence fee collections are directly proportional to the revenues of the operators. As such, the fact that the licence fee collections are only nominally higher than the current year can only mean two things.

Either the DoT is going to reduce the licence fee rates (something that is operators are clamouring for), or it has estimated that the tariff reductions in the sector will severely hamper the revenues of the operators.

According to industry sources since the reduction in tariffs are also accompanied by an increase in the subscriber base, the overall revenues of the industry should only increase. Clearly, it has to be lower licence rates, they noted.

Currently, the licence fees are being levied in a three-tier structure, based on the circles of operation. While 12 per cent of the adjusted gross revenues (AGR) of the operators in the metros and A circles is collected by DoT, 10 per cent is charged from the operators in Circle B and eight per cent from Circle C. All these collections of course accrue to the consolidated fund and not into the DoT kitty.

As per the estimates forwarded to the Finance Ministry for the Union Budget 2003-04, while licence fees paid by Bharat Sanchar Nigam Ltd (BSNL) in the current year would gross Rs 1,490 crore by end-March, Mahanagar Telephones Nigam Ltd (MTNL) would pay Rs 269 crore, Videsh Sanchar Nigam Ltd (VSNL) Rs 227 crore and the private operators together Rs 460 crore.

For the next fiscal, the licence fees have been pegged at Rs 1,373 crore, MTNL Rs 423 crore, VSNL Rs 240 crore and the private operators Rs 498 crore respectively.

These estimates exclude the collections for the universal services obligations (USO) fund which amount to five per cent of the licence fees collected. In the current fiscal, this amount has been pegged at Rs 1,707 crore, while for the next fiscal it is being budgeted at Rs 1,858 crore. The sources noted that the reduction in licence fee rates has been in the air for sometime now, the only major stumbling block being the Finance Ministry, which will not be comfortable with any reduction with the licence fees.

However, the fact that the Budget will peg the collections only marginally higher than the current years' collections does indicate that the Finance Ministry may have given its approval. DoT officials, however, declined to comment on the matter.

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